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During times of rising prices, which of the following is not an accurate statement?

a. Average costing will yield results that are between those of FIFO and LIFO

b. LIFO will result in a higher cost of goods sold than FIFO

c. FIFO will result in a higher net income than LIFO

d. LIFO will result in higher income taxes than FIFO

 

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Jean Keeling
Jean KeelingLv2
27 Apr 2020

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Related questions

Comparing Inventory Methods

Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results.

In each dropdown that follows, select the correct sign [less than ( <), greater than (> ), or equal (=)] for each comparison, assuming periods of rising prices.

1. FIFO inventory > LIFO inventory
2. FIFO cost of goods sold LIFO cost of goods sold
3. FIFO net income LIFO net income
4. FIFO income taxes LIFO income taxes

20 Which of the following are true regarding LIFO and FIFO inventory costing methods in a period of rising prices? a. LIFO results in lower cost of goods sold and lower inventory balances. b. FIFO results in lower cost of goods sold and lower inventory balances. C. LIFO results in higher net income and lower inventory balances. d. FIFO results in lower cost of goods sold and higher inventory balances. e. None of the above. The correct answer is 'd'.

10. If costs are rising, which of the following will be true? A. Cost of goods sold will be smaller if LIFO is used rather than FIFO. B. Ending inventory will be smaller if LIFO is used rather than FIFO. C. Net income will be greater if LIFO is used rather than FIFO. D. Tax expense will be greater if LIFO is used rather than FIFO.

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